Seven years of extraordinary fiscal and monetary stimuli are proving ineffective towards achieving the growth and inflation targets laid out by the Federal Reserve. The consumer-price index, the producer-price index and gross domestic product have all failed to grow over 2 percent.
This is because stock prices, at these unjustified and unsustainable levels, need massive and ever increasing amounts of quantitative easing (new money creation) to stave off the gravitational forces of deflation.Fittingly, it isn't much of a mystery that the major U.S. stock averages have gone nowhere since QE officially ended in October of 2014.
According to the highly accurate Atlanta Fed model, GDP for the third quarter will be reported at an annual growth rate of just 0.9 percent. And things don't appear to be getting any better for those who erroneously believe growth comes from inflation: September core retail sales fell 0.1 percent, PPI month over month was down 0.5 percent and year over year was down 1.1 percent.